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The Real Deal Los Angeles

The royal families of Los Angeles real estate

LA’s most powerful clans are stepping up their game
By C. J. Hughes | April 28, 2017 09:30AM

(Illustration by Neil Webb)

From the April issue: Though Los Angeles may sprawl far and wide, the city’s real estate roots are relatively shallow. Unlike in New York, where dynasties often stretch back a century or more, many of the most powerful families in Los Angeles County real estate date back only to the 1970s.

But despite their relative youth, L.A.’ s royal real estate families are gaining notoriety. Brokers, developers and land-use analysts say that these families are increasingly active as they seek to leave their imprint on the city.

The youngest members of these influential clans are pushing to capitalize on family portfolios, turning discount stores into luxury condos, parking lots into rental projects and nightclubs into high-end boutiques.

“These kids don’t want to be in the shadows of their fathers. They want to make their mark,” said Adam Tischer, a senior vice president with Colliers International. “Los Angeles families are showing they can be innovative, vibrant and can improve the city.”

Based on interviews with industry leaders and publicly available   data, The Real Deal presents eight of the most influential families in Los Angeles County real estate who are currently active.

TRD’s list considered Los Angeles-based companies with major holdings that were in apparent good standing. This should not be considered a definitive ranking of the most powerful families —  honorable mentions also go to the Caruso clan, the Black family and the Rising family, as well as the Cusumanos of the San Fernando Valley.

Unless indicated otherwise, the family firms profiled here declined to comment for this story.

Illoulian family

This Iranian family began snapping up sites in West Hollywood and Beverly Hills soon after Rohollah, or “Rudy,” Illoulian and his four sons, Jerry, Perry, John and Michael, arrived in Los Angeles in 1968. Their first purchase was the commercial building 8850 Wilshire Boulevard, home to Audi Beverly Hills, which is still family-owned today.

Since Rudy’s passing in 1994, his four sons have come to co-own and manage about 75 buildings through a holding company called Aga John, which was the name of Rudy’s father. Brokers not associated with the company say the properties are collectively worth billions. Aga John also controls a rug store of the same name, with three locations in California, including at the Pacific Design Center in West Hollywood.

 The most striking example of a young developer moving the ball down the field may be Rudy’s grandson (son of Jerry Illoulian), Jason Illoulian, 34. At 22, Jason founded Faring Capital, a firm working to find new uses for longtime family holdings. His sister Jessica, 37, is Faring’s director of design.

“We have very low leverage, and we rarely sell anything,” Jason said of his three-generation company’s real estate holdings. “But as L.A. has grown up as a city, a lot of our sites have become ripe for development.”

Take, for example, the former furniture showroom at 8711 Melrose Avenue, which the Illoulians razed in 2012 to make way for a new retail building topped by Catch L.A., a seafood hotspot.

But the 15-employee Faring also develops sites on its own, like Robertson Lane, a mixed-use offering with a hotel, restaurants and shops. Bowing to preservationists, Faring will also restore a former factory on the site that once housed Studio One, a 1970s gay club, and also remodel an outpost of Norms, a mid-century restaurant.

In addition, Faring is at work on a 50-unit condo-and-rental building (featuring a bowling alley) at 702 North Doheny Drive, due to open in 2018. Faring is also planning a hotel-and-rental-apartment development at 7811 Santa Monica Boulevard, among other projects.

“The Illoulians have such scale and history in West Hollywood, it appears as though they are able to make meaningful improvements in the neighborhood and be sensitive to their communities,” said Tischer of Colliers.

Kilroy family

Kilroy Realty, a publicly traded firm with holdings up and down the West Coast, can trace its roots to 1947. In that year, John Kilroy Sr., the son of an Alaskan gold prospector, started a real estate brokerage with just $100 to his name, according to company lore.

Today the firm, which owns or manages about 14 million square feet of mostly office properties (including about 4 million square feet in places like Long Beach, El Segundo and Los Angeles) is helmed by John Kilroy Jr., its chairman and chief executive officer. John Sr. died in October at 94.

Several of the properties the company acquired in its early days are located near airports, reflecting the company’s belief that people would increasingly travel by plane, brokers say.

One of Kilroy Realty’s most high-tech holdings, which emphasizes their eco-friendly bona fides, is the mixed-use Columbia Square at 6121 Sunset Boulevard in Hollywood, which offers composting  and electric-car charging stations.

The former CBS studios facility bounced between landlords for years and became run down in the process. Kilroy acquired the 685,000-square-foot site in 2012 and subsequently restored and renovated it as part of a $391 million project. Commercial tenants include Fender Guitars, Viacom and Legend 3D.

Also on-site is Hollywood Proper Residences, a 21-story, 200-unit extended-stay hotel, which boasts rooms with hardwood floors and floor-to-ceiling windows that come furnished or unfurnished. In March, the cheapest room at the hotel, which opened last summer, was a one-bedroom at $3,500 a month.

Based on public filings, the office portion of the property seems to be the firm’s highest-performing holding, with annual rents of about $50 a square foot.

As a real estate investment trust with 245 employees, Kilroy enjoys a market capitalization of about $7 billion, according to Bloomberg.

Watt family

Ray Watt shaped the modern look of Los Angeles, brokers and developers say. The company he founded in 1947, Day and Night Construction, built about 100,000 homes in the South Bay and San Fernando Valley during the boom after World War II, according to the Los Angeles Times. Beyond ranch homes, Watt developed other ubiquitous Southern California building types: mobile-home parks, gated communities and 50 strip-mall-type shopping centers.

There were lean years; the Watt Company lost buildings in the prolonged recession of the early 1990s, and for decades, the Santa Monica-based firm, which is helmed by Ray’s son J. Scott as chairman, was more of a manager than a developer.

“After they got hammered in the recession, they seemed to be very inactive,” said Mark Tarczyinski, an executive vice president with Colliers International. “But after being virtually mothballed, they are comparatively active.”

That might have something to do with a third generation now in place. J. Scott’s daughter, Nadine Watt, became president in 2011. That same year the company founded Watt Investment Partners, a new-development arm.

In 2012, the firm purchased Centinela Studios, a 60,000-square-foot production facility at 3401 Exposition Boulevard in Santa Monica where “The Doors” movie was shot, for an undisclosed price. They sold it a year later to Hudson Pacific Properties for $25 million. Nadine Watt also oversaw the “greening” of Watt Plaza, a two-tower, black glass, 920,000-square-foot office complex in Century City that scored top-tier LEED Platinum status.

Dominguez family

Though it may be fueled by what’s trendy and new, Los Angeles still boasts a living link to the Spanish colonial era courtesy of the family-held Watson Land Company, which through seven generations of relatives is connected to settler Juan Jose Dominguez.

In 1784, King Carlos of Spain awarded Dominguez 75,000 acres in the South Bay that stretched from present-day Compton to the Pacific. The massive spread, which was the first Spanish land grant in California, peeled apart over the years; a dispute over cattle grazing led the rival Sepulveda family to win control of a 32,000-acre section that became Rancho Palos Verdes.

In 1965, the Dominguez family sold a 346-acre plot to the state for $10 million for the creation of California State University at Dominguez Hills.

Today the remaining parcels are controlled by the Watson Land Company, which was formed in 1912 and named for James Watson, a lawyer who married Maria Dolores Dominguez, the great-granddaughter of Juan Jose.

The firm’s current chairman is Robert Huston, whose father, William Huston, married Susanna Watson, the daughter of James Watson and Maria Dolores Dominguez, in 1954. (William, who stepped down in 2003, died in 2011.)

Exactly how much remains of those 75,000 original acres, originally known as Rancho San Pedro, is tough to quantify. But based on current listings, Watson, which specializes in industrial parks, controls several such properties in Carson. They sit near the Dominguez Rancho Adobe Museum, the surviving family homestead, parts of which were constructed in 1826.

Watson has also expanded its reach, with holdings in places like San Bernardino County, where it’s currently developing the Watson Industrial Park Chino, an 11-building, 5.1-million-square-foot facility.

All told, the company says it has developed and manages a hefty 19 million square feet of industrial real estate in the Los Angeles region.

Being near two of the world’s busiest ports, Los Angeles and Long Beach, means the Dominguez-Watson-Huston dynasty will probably have great incentive to hang on to the land for a few more generations, said Tarczyinski of Colliers.

“It was good that they turned the family farm into a corporation,” he said. “Otherwise, every time you hand something down, you get stuck with a giant tax bill.”

Hughes family

Though it’s an often-overlooked asset class, self-storage pays handsomely. Glendale-based Public Storage was co-founded by B. Wayne Hughes Sr. in 1972. Since then, the business has made billionaires out of several of his family members, which include son R. Wayne Hughes Jr., a trustee of the company, and daughter Tamara Gustavson, a board member who has worked at the firm intermittently since the 1980s.

The publicly traded Public Storage, which is considered by some experts to be the largest company of its type in the world, continues to have a major Los Angeles presence, with 222 facilities up and running in Los Angeles in March, according to a company spokesman. The cheapest space in Los Angeles, a five-by-four-foot cube, is as of press time $54 a month.

Public Storage also has a 42 percent stake in PS Business Parks, which controls 1.6 million square feet in Los Angeles County, the spokesman said.

Overall, the real estate investment trust enjoyed a net operating income of $1.79 billion in 2016, up from $1.65 billion in 2015, the company report said. On April 12, its stock was trading at $224.25 a share.

The Hughes children aren’t resting on their laurels. They’re also controlling Agoura Hills-based American Homes 4 Rent, which was founded by their father in 2012 and leases single-family homes across the country.

Another company owned by the siblings, American Commercial Equities Management, invests in retail properties, including stores in the Golden Triangle shopping mecca of Beverly Hills. Holdings there include 368 North Camden Drive, a stucco-sided storefront on the corner of Brighton Way, as well as 9565 Wilshire Boulevard, a triangular berth near Rodeo Drive, both of which were available for lease in March.

But storage will likely continue to be the family’s bread and butter. There’s been an explosion of new homes in the last decade, said Tarczyinski, and people need to stow stuff. “We all live in cracker-boxes,” he said. “Demand is growing, but there is an artificial cap on supply in terms of land prices”

Roski family

With an emphasis on warehouses and factories, the Majestic Realty Company, the Roski’s  family-controlled firm, claims to be the largest privately owned industrial developer in the country.

Of the 76 million square feet Majestic controls, much is concentrated (perhaps unsurprisingly) in the City of Industry, a gritty neighborhood in the San Gabriel Valley with sprawling complexes like the Fairway Business Center, an 186-acre, 13-building complex where GE is a tenant. Majestic also owns Grand Crossing, a 400-acre facility where Williams Sonoma has a distribution plant and which also offers 400,000 square feet of retail.

Founded by Edward Roski Sr. in 1948, the firm — which was initially a brokerage — later moved aggressively to build in the City of Industry, a remote agricultural tract incorporated only in 1957.

But if Roski, who died in 2000, was drawn to building around the city’s edges, his son Edward Roski Jr., the company’s current president and chairman, seems just as interested in the fate of Los Angeles’ Downtown. Roski Jr., whose net worth is estimated by Forbes to be $5 billion, was a developer of Downtown’s Staples Center and holds an ownership stake in the L.A. Lakers and L.A. Kings.

At the outset, the Staples Arena may have been a risky bet, but since then, “it’s changed everything over there,” said Stephen Algermissen, an executive director at Cushman & Wakefield.

The rare third-generation L.A. real estate dynasty, Majestic also counts Patricia Reon Roski, Ed Jr.’s daughter, as a managing partner. She is a Mandarin speaker and is expected to expand the family business into China, brokers say.

Taban family

Over just two generations, the Taban clan has snapped up billions of dollars’ worth of buildings in Downtown Los Angeles. The Tabans have been especially active in the South Park and Fashion districts, ignoring the critics who believed the area was not salvageable, brokers say.

Most of the Tabans’ real estate activity takes place under the name Jade Enterprises. Based on online records and interviews with brokers (some of whom work with the family and still don’t know who is related to whom), three brothers run the company: David, Albert and Benny Taban.

Some of their sons are also involved, including Brian, Jacob and Daniel, with both generations working side by side most days, a broker said. Another offspring, Eli, who used to be Jade’s in-house counsel, left in 2013 to hang his own shingle with the startup Big Law Partners, which offers real estate services to midmarket players.

The Tabans have been on a tear. Among their recent projects are a string of new-development rental buildings on somewhat gritty Downtown blocks that, like the development company itself, are named for gemstones. The 154-unit Emerald is under construction at 1340 South Olive Street, on a former parking lot, while the 159-unit Topaz is going up at 540 South Main Street, also on a lot. There’s also the Onyx, a two-tower rental with 410 units that will ultimately straddle Hope Street, near the Staples Center.

But Jade operates in many sectors. In 2014, it snapped up 660 South Figueroa Street, a 24-story office building with a parking garage at its base, for about $75 million.

Last year, the company paid Blackstone $159 million for five office buildings outside its core area, in Santa Monica, Culver City and Beverly Hills, among other addresses. Their moves are timely, said Paul Habibi, a professor at the Ziman Center for Real Estate at the University of California, Los Angeles, who said: “It wasn’t until about 10 years ago that the area was decent.”

Paul family

In 1985, prolific developer M. David Paul helped create the skyline in the once low-slung suburb of Burbank. After the opening of his curvy 15-story office building at 3500 West Olive Avenue, other high-rises followed, allowing Burbank to grow upward. Executives for nearby studios like Warner Brothers and the Walt Disney Company flocked to the area.

All told, Paul, who got his start in 1967, now controls about three-quarters of the Class A office market in Burbank, according to brokers who work there.

As Burbank grew, so did Paul’s family. Jeff Worthe, the founder and president of Worthe Real Estate Group, married Paul’s daughter Kristin, adding a branch to the family tree.

As he tells it, Worthe got his start in real estate in the 1980s, when he was a student at the University of California at Santa Barbara, knocking on doors as a broker.

He and his mogul father-in-law seem to have seamlessly blended their businesses. The two companies share the same website, which trumpets more than 8 million square feet in existing or developable real estate, including Santa Monica holdings, though the stake owned by each principal is not available.

Worthe Real Estate Group, whose affiliated companies also include Centurion Real Estate Partners and Krismar Construction, also had a hand in the emergence of Silicon Beach, the tech-focused Westside submarket.

In 2011, Worthe and Shorenstein Properties — a San Francisco-based commercial landlord — paid $47 million for a defunct 1970s-era postal facility in Playa Vista, then spent $30 million to rehab it as a mixed-use office campus with amenities like a dog park, a car wash and a sand-lined volleyball court. In 2015, the team sold the property, where TMZ is a tenant, to Invesco for $316 million, with Worthe staying on as manager.

Also included in the Paul portfolio is a dazzling 14-story glass cube at 2900 West Alameda in Burbank, otherwise known as the Pointe, which is home to KCET, a public-television station.

“Their specialty is entertainment-related office space, so they did really, really well with this,” said Algermissen of Cushman & Wakefield.

If Worthe’s father-in-law did cast any shadows, Worthe seems to have climbed out from under them. “He’s created a lot of new value,” Algermissen said. “In my opinion, he’s very much his own man.”